Ohio can't afford to kill Third Frontier: Brent Larkin

That Ohio's economy is a mess is a given -- especially Greater Cleveland's.

If you want to make them both worse, vote against State Issue 1 on Tuesday.

State Issue 1 would authorize issuing an additional $700 million in bonds to extend through 2016 the Third Frontier -- one of the nation's most successful government programs designed to create jobs by investing in businesses that align with the 21st century economy.

The Third Frontier isn't a long-term fix. It won't, in and of itself, halt Ohio's hemorrhaging of jobs or its alarming, 30-year slide in per-capita personal income. The state's bad business climate is one that desperately needs to be addressed by the winner of November's gubernatorial election, be it incumbent Democrat Ted Strickland or Republican John Kasich.

What's more, Ohio was a late arrival to the high-tech jobs party. After an initial rejection, voters didn't fully fund former Gov. Bob Taft's big and bold program until 2005. Since then, the Third Frontier has partnered with Ohio's colleges and universities on a merit-based system of investing that has produced consistently impressive results.

From 2000 through 2009, Ohio lost more than a quarter million jobs. In contrast, Third Frontier grants have attracted or capitalized 637 companies, creating nearly 55,000 new jobs.

"This thing is a differentiator," said Ohio State University President Gordon Gee, the Third Frontier's most quotable and effective cheerleader. "No one in the country has done this as well as Ohio -- creating partnerships between universities and businesses. It's a reinventing strategy. It really is."

By far Strickland's most significant accomplishment as governor has been the state's increased investment in higher education. With some help from the legislature, Ohio finally understands the importance of higher education's essential role in a knowledge-based economy and the need to produce more graduates with degrees in math, science and technology.

College enrollment is increasing. The state's educational attainment level is inching up. And while the brain drain remains a problem, the out-migration of college graduates has shown signs of easing.

The Third Frontier also complements Ohio's new higher education strategy by making major investments in businesses that focus on advanced energy, biomedical, instruments and electronics, power and propulsion, and emerging materials.

But perhaps the strongest persuasive argument for supporting State Issue 1 is a selfish one. While the Cincinnati and Columbus regions have done well in attracting Third Frontier grants, Greater Cleveland's universities, research centers and high-tech firms have attracted, by far, the largest share of Third Frontier investments.

Through 2009, Northeast Ohio has received nearly 43 percent, or $424 million, of the $992 million in Third Frontier grants. That's why area business and civic leaders, along with this newspaper, complained so angrily when Strickland made minor changes to the merit-based selection rules.

Strickland enthusiastically supports State Issue 1. Kasich says he does, though he is known not to be a fan of these types of government investments. Nevertheless, Third Frontier passage is no slam-dunk. It failed once (2003) and voters are in a surly mood -- especially when it comes to government spending.

Although the Ohio Department of Development estimates the Third Frontier will soon pay for itself in new tax revenues generated, taking on $700 million in new debt is a problem for a state that, as shown in a New York Times graphic on March 29, is one of the worst in the nation in debt as a percentage of its gross domestic product.

A thoughtful conservative friend who pays close attention to public policy recently e-mailed me that the Third Frontier is well-meaning and has done some good, but "is like stopping a severed artery with a Band-Aid" because it "only masks the real problem" -- that Ohio still isn't a business-friendly state.

Given Ohio's job losses, it's tough to quarrel with her argument, but it seems to me the Third Frontier begins to nudge the state in the right direction.

"Yes, we have to reinvent state government," acknowledged Gee. "And universities are in the process of reinventing themselves. Colleges used to be places we sent our kids for four years to have a good time. Now they're the smokestack industries of the 21st century. The Third Frontier helps us turn ourselves from the rust belt to the knowledge belt. It's as clear as can be."

We'll know Tuesday whether voters share his clarity.

Larkin was The Plain Dealer's editorial director from 1991 until his retirement in 2009.

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